# 2017 Level III Mock Exam Am question 37

Hi all -

struggling to figure out why the answer is B, value weighted (13.5%) when my calculation for an equal weighted return is 13.72% - sum of market cap appreciation =68.6%/5= 13.72%. What am I doing wrong here? Question asks for which methodology produces the highest return

I think you are just doing the math wrong, apply 20% to each of the returns, its like 12.4%

Value-weighted method

Return = 178.2 / 157 - 1 = 13.5%

Equal-weighted method

Return = (7.70% + 17.9% + 14.3% + 11.6% + 10.5%) / 5 = 12.4%

Price-weighted method

Proportion invested in Singtel = 2.35 / 56.41 = 0.0417

Proportion invested in Wilmar = 5.77 / 56.41 = 0.1023

Proportion invested in DBS = 11.62 / 56.41 = 0.206

Proportion invested in Jardine = 23.94 / 56.41 = 0.4244

Proportion invested in UOB = 12.73 / 56.41 = 0.2257

Return = (0.0417)(7.7%)+(0.1023)(17.9%)+(0.206)(14.3%)+(0.4244)(11.6%)+(0.2257)(10.5%) = 12.39%

Thanks for the responses. Looks like I messed up using change in market cap as the return component for equal weighted instead of change in price. I still am slightly confused here. In each case the return component for each stock should be the same correct? It’s just the weightings which are different. Shouldn’t the value weighted index also use the change in price as the return component and weight them appropriately using market capitalization? Change in market cap would capture things you wouldn’t want to capture like share buybacks and new issuances… am I overthinking things?